Steve Jobs writes: "Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat."

...then why not at least license FairPlay and/or license other DRM technology from other companies.

Jobs refutes this specifically in the letter - it's completely impractical to license Fairplay, mainly because it exponentially increases the chance for leaks of the DRM code, and makes updating players to fix DRM-breaks incredibly difficult.